If there is one sad fact that technology has taught us, it’s maybe that we just can’t have nice things. Now Washington DC has become the latest testing ground for what happens when technology and good intentions meet the real world.

Brightly coloured bikes began popping up around the US capital in September like little adverts for a better world. On a recent trip two lemon yellow bikes were propped up in the autumn sun by the carousel on the Mall. A pair of lime green bikes added a splash of colour to a grey corner of DuPont Circle. An orange and silver bike waited excitedly for its rider outside the George Washington University Hospital.

The untethered bikes all belong to a new generation of “dockless” bike share companies. To pick one up users download an app that shows where the bikes have been left. Scan a QR code on your phone, the bike unlocks and you are off for a $1 30-minute carbon-free ride. Unlike docking rental services, which require bikes to be returned to a fixed docking station, you can leave your ride wherever your journey ends, practically. And therein lies the problem.

Dockless bikes wait for their riders in Washington DC. Photograph: Dominic Rushe for the Observer

Behind this bucolic scene is a multibillion-dollar cutthroat battle that is pitching two of China’s most successful tech companies against Silicon Valley-backed rivals and a system that has proved, shall we say, problematic, in other cities.

DC’s dockless bike experiment is a beta test designed to run through April next year. It seems to be working beautifully. The city already has close to 4,000 docked bikes serving two million-plus riders a year with its Capital Bikeshare system. So far the companies offering dockless bikes – China’s Mobike and Ofo and the US-backed LimeBike, Spin and Jump – have only been allowed to put up to 400 bikes each on the streets. That’s six bike companies for a city of just over 680,000 people – not all of them bike riders.

Uber for bikes: how 'dockless' cycles flooded China – and are heading overseas

Read more

At current levels the bikes are fairly inconspicuous but all the companies are keen to expand. LimeBike’s founder Toby Sun has said he’d like to see 20,000 dockless bikes in the city.

Sadly in other cities this green – and taxpayer-free – solution to urban transport issues has turned into a surreal nightmare.

In China, where there are some 16 million shared bikes on the street and MoBike alone now has over a million, the authorities have been forced to clear up ziggurats of discarded bikes. Residents of Hangzhou became so irritated by bikes lazily dumped by riders, and reportedly sabotaged by angry cab drivers, that the authorities were forced to round up 23,000 bikes and dump them in 16 corrals around the city.

Utteeyo Dasgupta, assistant economics professor at Wagner College in New York, said the bike dilemma had some similarities to the “tragedy of the commons” – the economic theory that individuals using a shared resource often act according to their own interests and to the detriment of the shared resource.

There are two distinct “abusers” in the case of dockless bikes – riders and vandals. In the case of riders, problems are likely to be exacerbated by competing bike companies flooding the market with bikes in order to win market share. “The tipping point is likely to come when there are so many bikes that each user stops internalizing the cost of not getting a bike,” he said. With bikes literally littering the street, riders become less mindful of how they treat the bikes and where they leave them when there is always another to pick up.

The second group of abusers, vandals, are a different matter and one better dealt with by law and order than apps or economics. But again, said Dasguppta, supply and demand rules apply. The more bikes there are, the more opportunities for vandals.

As dockless bikes spread across the US no one is more determined to make sure decorum is maintained in DC than the companies spreading them. “Biggest concern I hear is what is parking going to look like,” says LimeBike’s Maggie Gendron, director of strategic development and a former legislative assistant to Vermont’s Senator Patrick Leahy. Officials “might not necessarily want bikes all over the street”, she says.

But cities too “are at a tipping point”, she says. They do not want more cars downtown and they are looking for responsible transportation solutions that can ease congestion. Dockless bikes offer a solution at no cost to the city, freeing money for other investments.

Manchester’s bike-share scheme isn't working – because people don't know how to share | Helen Pidd

Read more

The companies are hoping technology can head off the excesses other cities have witnessed. Bikes can’t be locked in bad parking spots – outside city monuments and in security zones for example. MoBike and others punish poor parkers by increasing what they pay for rides and then knocking them off the system if they offend too often. But there is little to stop vandals and thieves doing what they will with the vulnerable two-wheeled steeds except for common decency. A virtue no tech company seems to have developed an app for yet.

And the battle for supremacy means inevitably that more bikes will soon end DC’s dockless bike paradise. MoBike and Ofo have raised more than $1bn each from investors this year alone. LimeBike, started in January, has already raised $62m from investors including Andressen Horowitz, which counts Skype, Twitter and Instagram among its others among its former proteges. Bike wars are here.

Outside the White House Wijnand Vanderwerf has seen the dark side of bikes firsthand. Watching a protest (unrelated) and sitting astride a MoBike he said he liked the service in DC but that it would never work in his native Holland. He already has three bikes (one for the city, one for longer rides and a spare for guests) and so do most of his friends. “There’d be nowhere to park them,” he says.